NHSC and PSLF?

[Leonardsean]

I am considering my first position out of residency, and while in residency I made approximately 20 payments towards public service loan forgiveness.

One of the jobs I was offered qualifies for NHSC loan repayment, $50,000 for 2 years?

My question is: Are these 2 programs compatible? From what I read last night, the NHSC makes a lump sum payment, then you have to complete the contract. I assume my loan payments made to my loan servicer, during that 2 year period would also qualify against the 120 total payments?

Any insight would be appreciated.

thanks.

--Sean

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[Mosonik]

Yes, you can qualify for both simultaneously. I don't think you often see this done because PSLF is a tax-free, loan forgiveness program that is inclusive of all direct loans. It may not make sense to do both IF you do end of achieving PSLF but doing NHSC loan repayment in the process of pursuing 120-payment PSLF primarily makes sense in case you end up not qualifying for it further into your career or PSLF is somehow eliminated without grandfathering in current borrowers.

 

[Leonardsean]

I didn't think PSLF was tax free. I thought they hit you with a nice tax bill for the remainder forgiven at the end of the 120 payments? Guess I have to check my promissary note.

Do you need to, specifically use the NHSC disbursement for Student Loan debt? I accrued a large amount of debt from school, home repairs ad car loans during my time in residency, med school and a previous graduate school experience that I would like to use the money to pay off. MY understanding in talking to NHSC is that the money is disbursed in one lump sum to a checking or savings account (not directly to the loan itself) and is disbursed at the beginning of the 2 year contract.

Do they require that the money be put towards your outstanding student loan debt, specifically?

--Sean

 

[smq123]

I didn't think PSLF was tax free. I thought they hit you with a nice tax bill for the remainder forgiven at the end of the 120 payments? Guess I have to check my promissary note.

Do you need to, specifically use the NHSC disbursement for Student Loan debt? I accrued a large amount of debt from school, home repairs ad car loans during my time in residency, med school and a previous graduate school experience that I would like to use the money to pay off. MY understanding in talking to NHSC is that the money is disbursed in one lump sum to a checking or savings account (not directly to the loan itself) and is disbursed at the beginning of the 2 year contract.

Do they require that the money be put towards your outstanding student loan debt, specifically?

--Sean

Yes. They usually ask for proof that you've sent the money to your (educational) loan company.

 

[Leonardsean]

Does it have to be applied in a lump sum fashion, or can it be placed in an account and used to pay the monthly Pay-as-you-earn/PSLF 120 payments?

 

[smq123]

Does it have to be applied in a lump sum fashion, or can it be placed in an account and used to pay the monthly Pay-as-you-earn/PSLF 120 payments?

That's a good question, and I don't know the answer. Most people just apply it in a lump sum fashion to save on interest, but I honestly don't know if the second method is approved or not.

 

[Freezeout]

I didn't think PSLF was tax free. I thought they hit you with a nice tax bill for the remainder forgiven at the end of the 120 payments? Guess I have to check my promissary note.

Do you need to, specifically use the NHSC disbursement for Student Loan debt? I accrued a large amount of debt from school, home repairs ad car loans during my time in residency, med school and a previous graduate school experience that I would like to use the money to pay off. MY understanding in talking to NHSC is that the money is disbursed in one lump sum to a checking or savings account (not directly to the loan itself) and is disbursed at the beginning of the 2 year contract.

Do they require that the money be put towards your outstanding student loan debt, specifically?

--Sean

They do hit you on the backend with the amount forgiven being taxable (I think as income essentially).